Live, Work & Play
in Foster City
City of Foster City
Financial Services Dept.
Positive revenue growth trends for the fiscal year is expected to help alleviate the projected General Fund deficit from $6.32 million to $4.54 million
The FY 23/24 adopted General Fund budget (Funds
001 to 003) included a projected deficit of $6.32
million, inclusive of a $6.0 million transfer out to
the City’s CIP Fund. Improvements in several rev-
enue categories during th e 1st half of the fiscal
year as well as a favorable outlook is prompting a
projected reduction of our projected deficit to
$4.54 million.
Total General Fund Revenues (Funds 001 to 003)
for the 6 month period were $31.23 million. Prop-
erty tax revenues including ERAF refunds were
$19.94 million compared to $18.91 million in the
prior year. Having received our 1st installment of
ERAF, the full year projection has been revised to
include the second insta llment payment expected
later this year. Property tax in Lieu of Vehicle Li-
cense Fes declined from $4.41 million to $2.20 mil-
lion as the City received a $2.01 million VLF short-
fall payment from the State via the County in FY
22/23 verses a VLF shortfall payment of $667,557
in the current fiscal year . In addition, since there
are only five non-basic aid school districts this fiscal year compared to six in the prior fiscal year, the
County has less available pr operty tax revenues to
fund this year’s VLF. Hence, this year’s VLF short-
fall is estimated to be $114.39 million (FC’s portion
is $2,285,850) compared to last year’s shortfall of
$70.05 million (FC's portion is $1,398,472). As a
result, staff is reducing this year’s VLF revenue pro-
jection by $652,000 from $4.39 million to $3.74
million. Sales tax improved by $124,000 to $1.96
million compared to the pr ior year. Transient Oc-
cupancy Taxes continued its recovery, improving
from $1.56 million to $2.01 million. Recreation
fees climbed $229,000 to $1.01 million. Invest-
ment income jumped $729,000 to $1.14 million as
the higher Fed Funds rate have remained un-
changed at 5.25% to 5.50% since July 2023. Inter-
governmental revenues declined by $4.12 million as
one-time ARPA (American Rescue Plan Act) fund-
ing ended last fiscal year.
General Fund expenditures (Funds 001 to 003) to-
taled $28.72 million or 48.4% of the annual budget
compared to last fiscal year’s mark of $29.68 million
with unfilled positions still an ongoing challenge. The wage COLA for FY 2023-24 was 4.2% for the both
the POA bargaining unit and the Management unit.
The AFSCME unit finalized their labor agreement in
October 2023 with a 5% COLA adjustment retroac-
tive July 1, 2023. The City made 3 quarterly pay-
ments to San Mateo Consolidated Fire for its 20%
shared costs for fire protection and prevention ser-
vices.
Expenditures for many of the City’s special revenue
funds, including Measure A, Measure M, SB1, and
Measure W funds are non-linear and commonly pro-
gram and/or project driven. Water and Wastewater
Enterprise operating revenues were 14.7% and 11.9%
ahead of last year’s pace due to a combination of new
rate increases that took effect July 1 and higher in-
vestment income. Water operating expenditure
were 8.8% higher due to higher wholesale water
rates and a general increase in operating and labor
costs. Wastewater expenditures were 3.8% higher.
Notwithstanding, these enterprise fund expenditures
were well within the budget for the six month period
and are expected to be withi n full year’s targets by
year-end.
As stated earlier, the City continues to experience
difficulties in filling vacant positions, including eco- nomic development manager, human resources man-
ager, and police officers. The projected multi-year
structural deficits, cost impacts from two consecutive
years of CalPERS underperformance of investment
returns (a negative 6.1% return in FY 21/22 and a
5.8% return in FY 22/23 compared to their 6.8% an-
nual target), annual VLF shortfalls and the State’s pos- turing in possibly not backfilling these vital revenues are some of the major challenges as City staff begins
the preparation of its FY 24/25 budget and 5-year
financial plan.
Foster City Financial
Update FY 23/24 Q2